Taipei, Taiwan – October 10: Taiwan President William Lai delivers a National Day speech during a National Day ceremony held in front of the Presidential Palace in Taipei, Taiwan, on October 10, 2025.
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Taiwan will introduce an additional defense budget of NT$1.25 trillion ($40 billion), President Lai Ching-de said at a press conference on Wednesday, as Beijing accelerates military preparations near the island.
Lai said China continues to increase military exercises and so-called “gray zone harassment” around Taiwan, with the goal of seizing the island by force by 2027, according to a CNBC translation of his remarks in Mandarin. The speech came in the wake of the diplomatic dispute between China and Japan over Taiwan.
Lai added that the Chinese government is intensifying its “infiltration and influence campaign” using various means to interfere in Taiwan’s politics and society as it seeks to sway public opinion and undermine Taiwan’s democracy.
He also warned of Beijing’s “unprecedented military buildup” and “intensified provocations in the Taiwan Strait, East China Sea, South China Sea, and across the Indo-Pacific.”
The Chinese government regards democratically-ruled Taiwan as its own territory, and Chinese President Xi Jinping views unification with the mainland as a “historical necessity.” Taiwan rejects these claims.
China has increased pressure on Taipei, holding several military exercises off the coast of Taipei in recent years and issuing stern warnings against Taiwan’s “provocations to independence.”
The Chinese government is increasing its defense budget by 7.2% this year to about $245 billion and deploying military assets on a large scale near the Taiwan Strait, according to analysts at the Center for Strategic and International Studies.
Lai on Wednesday vowed to strengthen Taiwan’s self-defense capabilities in the face of growing threats from China and achieve a high level of combat readiness by 2027.
“President Lai’s announcement signals Taipei-Washington’s commitment to self-defense and its intention to increase imports to balance trade between the two countries,” said Drew Thompson, a senior fellow at Singapore’s S. Rajaratnam School of International Studies.
Since his election campaign, US President Donald Trump has called on allies to increase defense spending. Trump even suggested that Taiwan should pay for protection.
Shortly after Lai’s speech, Raymond Green, director of the American Institute in Taiwan, the de facto US embassy, said in a social media post that the US “welcomes” the special defense budget and supports Taiwan “quickly acquiring the critical asymmetric capabilities needed to strengthen our deterrence.”
“The Democratic Progressive Party’s plan to resist unification and use force to seek independence is doomed to failure,” a Chinese Foreign Ministry spokesperson said at a regular press conference on Wednesday, when asked to comment on Taiwan’s defense budget and Green’s comments. This is according to a CNBC translation of the statement in Chinese.
China has been at loggerheads with Japan over Taiwan, with China accusing Japan of meddling in its internal affairs after Japanese Prime Minister Sanae Takaichi said earlier this month that the use of force in the Taiwan conflict could be considered an “existential threat” to Japan. The Chinese government condemned the remarks as “terrible” and demanded that they be retracted.
President Trump spoke separately by phone with Mr. Xi and Mr. Takaichi on Monday. Experts say Mr. Xi likely used the call to influence Mr. Gaoichi and seek cooperation from Mr. Trump to soften his rhetoric on cross-strait issues.
